How Does Privatization Affect a Company's Shareholders?
The process of taking a company private is the reverse of an initial public offering, or IPO, but involves fewer regulatory hurdles. In essence, those taking a company private buy a controlling interest in the company and then have its shares delisted from the stock exchange, effectively making it privately held. In some cases some shareholders can continue to own shares of the private company, but for the most part, shareholders are handsomely rewarded for giving up their stake.
The process of privatization is usually conducted out in the open, but hostile takeovers do sometimes occur. In a hostile takeover, private buyers purchase a controlling interest of shares on the open market and then use their voting power to change the board of directors or convince remaining shareholders to agree to the sale. Numerous defenses have been written into the bylaws of most public companies that make hostile takeovers more difficult than they'd been in the past. Most privatizations therefore are done through what's called a tender offer. This is an offer from the buyer or buyers to acquire shares of the company at a premium, a higher price, to the company's then current trading value in the market. In most cases, a tender offer will immediately benefit shareholders because the stock will rise in public trading to reflect the offer. A majority of the shareholders must agree to part with their shares, however, for the sale to take effect, so this empowers shareholders with disproportionately large stakes in the company. When a controlling interest is reached, the stock can be delisted.
How does privatization affect a company's shareholders?
The most recognized transition between the private and public markets is an initial public offering (IPO). Through an IPO, a private company "goes public" by issuing shares, which transfer a portion of ownership in the company to those who buy them. However, transitions from public to private also occur. In public to private market transactions, a group of investors purchases most of the outstanding shares in the public company and makes it private by delisting it. The reasons behind the privatization of a company vary, but it often occurs when the company becomes heavily undervalued in the public market.
The process of making a public company private is relatively simple and involves far fewer regulatory hurdles than the private to public transition. At the most basic level, the private group will make an offer to the company and its shareholders. The offer will stipulate the price the group is willing to pay for the company's shares. Once the majority of the voting shares have accepted the offer, shares of the company are sold to the private bidder, and the company becomes privately held.
The biggest obstacle in this process is getting the acceptance of a company's shareholders, the majority of which need to accept the offer in order for the transition to be completed. If the deal is accepted by the shareholders, the company's buyer will pay a consenting group of shareholders the purchase price for each share they own. For example, if a shareholder owns 100 shares and the buyer offers $26 per share, the shareholder will receive $2,600 and relinquish his or her shares. There is a large benefit to this type of transaction for investors, as the private group usually offers a substantial premium for the shares compared to the current market value of the firm.
An example of a public company that became private is Toys "R" Us. In 2005, a purchasing group paid $26.75 per share to the company's shareholders - more than double the stock's $12.02 closing price on the New York Stock Exchange in January 2004, the trading day before the company announced it was considering dividing the company. As this example shows, shareholders are usually well compensated for relinquishing their shares.
Last year, maybank analyst said, khazanah wanted 60sen n above if they sell its stake. Now, at 21sen , khazanah needs to pay rm1bil for the remaining shares. Even, at 42sen, only pay rm2bil. To please the minority shareholders, I think the offer price would be at least 40sen n above. Fingers crossed
it will try to break 0.25 i think today. they need the return of their investment.I dont think khazanah will privatize MAS at a very low price. For sure it is at a premium which at least please the minority shareholders and get their return of investment at least. Some more it is national airline ma....tak kan mau jual murah-murah...for sure the price will shoot up...
I also same opinion with speakup. MAS share will not up much as it UNION and staff are problematic to the whole organisation. Khazanah sure want to privatise at cheap price in order to attract NEW investor to recoup their losses in MAS.
Hello everyone. Just want to ask a few things and if you can share your thoughts I would appreciate it very much.
1. If Khazanah plans to privatize MAS, doesn't that mean that they will sell to the purchasing group who is willing to take over the company? Or does it mean that Khazanah will delist MAS, buy the remaining shares from other shareholders (at whatever price) and manage it as a private entity?
2. Say that the share price is not preferable for us and then we decide not to sell the shares before privatization, is it possible that MAS will be listed again say in 5 years time? What are the chances of this happening?
if I were Khazanah I wont privatise it now. I will slowly push down the price, let the privatisation rumour die down, then surprise everyone with privatisation < 20sen.
Focus on what the price action tells us instead of speculating over things beyond our control & knowledge. Price action tells us that MAS open gapped up which is possibly a breakaway gap on extremely high volume (way above its 20-day moving average volume!) Breakaway gaps usually signifies the beginning of a new trend and an important market move. Stop loss below 20 cents.
Khazanah needs to jack up the price before privatize, if not, those cronies that have high priced shares will really fxxk Khazanah. After that, all investors will get screw left and right until the NTA price.
Posted by Pi Di Tan > Jun 30, 2014 12:37 PM | Report Abuse X
current PVTS readings : If the invisible-hand hold the price 0.20 for the next 3-4 days, all the negative technicals is reversed, but if price break 0.19 TOMORROW, SOME (if not ALL) helll breaks loose ...
---------------------------------------------------------------------------- Current PVTS reading : Price DID hold above 0.20 last 3 days and on the 4th day (this morning) opened gap-up to 0.24-0.25, with a dip to 0.23 (presummary a setting as the bottom) for rallying forward -- another 10cents angpow RAYA this time? (June 10 cents angpow was for the PUASA) and BOTH angpows should make the big-size-wife-of the-power-man very very pleased.......so should all the retail/ikanbilis who braved to hitch a ride!!!!
The 0.19 and below was RESISTED and the filling of gap at 0.215 less likely barring stock crashes overseas....whether close-gap or not the trend almost set, and price now is "like at the BEGINNING" some day....
If the above scenario come through, expect End July31 CLOSING MONTH-HIGH of 0.27 -- My personal feeling : all ikanbilis who are not umno-cronies , hitherto feels lost and helpless and poor (by those powerful insiders and elites criminally and improperly enriching themselves through ceaseless thieving,robbing and manipulating of PUBLIC RESOURCES) to UNASHAMEDLY join in the spoil, piggy-back on this " Once-Your-Life-Time" MAS-Stock manipulation!!!!
My PVTS told me since after my last post @June30 --"some deal" has already being struck at 0.40, and sorry naysayers and the doubtfuls for my hypocricy , playing MAS from now on is even worth it EVEN IF I LOOSE THE WHOLE 0.20Cents (ie MAS bankrupt)...some hints about my thinking of WHAT WILL UNFOLD SOON ON MAS PRICE-CHART TO THE VERY END :
today can close at 0.23 also consider lucky already. Not fly very high. Khazanah not yet take action on it. Hopefully tmr can fly high a bit. So, Everyone can fly and smile.
It s not official statement from Khazanah. It's just a lead from sources that get hold of the information and is not even named. I think something is brewing here.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Wow123
1,971 posts
Posted by Wow123 > 2014-07-03 08:59 | Report Abuse
Tak apa ini semua bayar dari rakyat. who's care.